Digital Intensity: The Fast Track To Digital Transformation

Gideon Malherbe
Gideon@govci.com
Amit Mathrani
Amit.Mathrani@govci.com
VCI USA Inc.
www.govci.com
Commercial-in-confidence
1
1 Context

2 Why VCI

3 Our Method: People, Process and Technology

4 Intensities, Economics And A Roadmap

5 Digital Transformation Hub

Commercial-in-confidence
2
The Low Price Of Oil Is Prompting Oil & Gas Companies To Define Their Digital Strategy

§ Increasing social expectation and shifting workforce demographics Question: Which of the following macro trends will have the
are demanding change in the way oil & gas companies operate. biggest impact on oil & gas industry over the next 15 years
Technology plays key role in responding

§ Technologies with potential to transform the industry (particularly big

data analytics and automation) have matured such that change will
accelerate in the coming decade

§ Relatively easy “cost-cutting” post the severe drop in oil prices is

coming to an end. To sustain productivity improvement in a low price
environment technology is central

§ Behavioral approaches to managing Safety risk are showing signs of

plateauing across the industry. To remove remaining serious risk,
new technology is required

The time to re-evaluate your approach to digitization is

right now, including why a digital roadmap is needed
Source: VCI’s Innovation State of Play survey for 2016

Commercial-in-confidence
3
Science And Technology Are Driving Business Change
Technology Trends
Increased data & connectivity
• Cloud computing, social networks
• Smart infrastructure, sensors

Sophisticated hard- & software

• Exponential computing power
• Virtual environments

Biology and DNA Sequencing

• Unconstrained mapping of DNA
• Fusing of nano and bio manipulation

Increased automation & robotics

• Intelligent, fully automated machines
• Data explosion through aerial equipment

Advanced materials
• Resource efficient materials
• High-tech / nano materials

Emerging energy shifts

§ Distributed energy systems
§ Smart / renewable energy

And more …

Commercial-in-confidence
4
Opportunities Abound To Improve $/Barrel Ratio

Oilfield
technology

Data Seismic inversion and

Production optimization
management basin drilling

Operational Reservoir characterization Field management and

analytics and simulation flow/composition analyses

Field Real time network and asset security utilizing

surveillance drones and wearable technology

Operations Minimally manned platforms,

Automated drilling
automation self diagnostic equipment

Integrated field
Logistics, planning execution and resource scheduling
planning and delivery

Asset optimization
Reliability, predictive condition based monitoring and machine to machine communication
technology
Commercial-in-confidence
5
The Future For Your Organization It Is Digital But Where Do You Start?

Digitization can add value to the business and define an actionable roadmap to attain this value is critical

1 Mapping current state of digital intensity

across operations and defining value adding
opportunities to introduce or improve
digitization

2 Defining the value proposition for identified

gaps / opportunities and creating a prioritized
portfolio of strategic initiatives

3 Developing an implementation roadmap of

identified initiatives at an operational level and
aligning with business

4 Setting up a digital transformation hub to

ensure execution in an Agile method to Source: Cisco CERAWeek 2015

account for dynamically changing technology

and operational environment

Commercial-in-confidence
6
VCI Is Your Partner From Assessment To Application

VCI’s Global Team VCI’s Global Results

Gideon Malherbe Roby Stancel

Partner – Strategy, Organization Partner – Innovation, Strategy & Cultural
Architecture & Innovation Transformation

London Munich

DIGITIZATION
San Francisco
Mike Neal Park City New York
DecisionNext CEO - Chris Taylor
Predictive Analytics, Dubai Hong Kong Principal – Strategy & Analytics
Supply Chain Mgmt.
Singapore

Brisbane

Santiago Perth
Johannesburg

Wayne FitzJohn
Partner – VCI Digital Graeme Stanway
VCI Hubs
Partner – Strategy, Operating Model & Facilitation
Partner Hubs Adrian Manger Lionel Louw
Principal – Integration and Change Partner – Organization Architecture, Strategy,
Client Engagements
Coaching & Facilitation
Ernst Griebel
Principal – Organization Architecture, Studies and
Turnaround

VCI’s Global Thought Leaders

Gideon Malherbe Graeme Stanway Lionel Louw Roby Stancel
Partner, USA Partner, Perth Partner, Singapore Partner, Germany
Commercial-in-confidence
7
Some Of Our Clients

Commercial-in-confidence
8
VCI Has Worked With Oil & Gas Companies To Accelerate Their Digital Deployment

1 Digital Intensity Assessment

2 Opportunity and Economics

3 Digital Roadmap

Commercial-in-confidence
9
The 4th Industrial Revolution Is DIGITAL
Mobile

AR | VR

3D Printing Mobile Payments

Crypto Currency
Wearables

Drones Electric &

Connected
Robotics Vehicles
Connected
10
Infrastructure Commercial-in-confidence
What We Do During The Assessment
1 2
Enterprise Valuation Digital Architecture
• Margin • Business Management Systems
• Asset Growth • Business Intelligence
• Top Line Growth • Management Operations System
• Operating Margin • Sub-Systems
• Asset Efficiency • Tele comms & Infrastructure
• Devices

BPM Framework People Readiness

• Optimized • Digitally Ready
• Predictable • Cautious Clicker
• Standardized • Compliant
• Managed • Traditional
• Initial • Unprepared
• Ad hoc • (use-trust-skill)

3 4
Commercial-in-confidence
11
Digital Intensity Is The Link Between Company Performance And Operations

Total Shareholder
Strategic Value Returns

Social Shareholder Environmental

Value Value Value

Economic Asset
Margin % Growth %
Economic
LENSES

Top Line Operating Asset

Growth % Margin % Efficiency

Intensity Enterprise Digital Intensity

Gathering & Gas processing Mixed NGL Fractionation NGL products &
Wellhead
compressing & treating pipelines facility pipelines

Operational Field Operations

Commercial-in-confidence
12
What Does This Mean For Your Business?
Digital Intensity ensures you don’t digitize for the sake of digitizing but rather focus on value-add capabilities
VISION

Digital Intensity Assessment

People Process Technology

Driving a cultural shift
through transparency and
new ways of of working
• Internal collaboration
• External collaboration
• Social platforms
• Training on-demand
• Enabling work
environment
Re-thinking the operating Defining needs and
model to enable working implementing technology to
digitally enable connectivity, analysis,
and faster decisions
• Process optimization • Technology architecture
• End to end integration • Technology Infrastructure
• Measure metrics / KPI’s • User experience/interface
• Network of technology
partners

Agile Project Management Office (PMO)

Commercial-in-confidence
13
People Skills Are Shifting

Coordinating

Meeting Networking

Sharing Communicating Co-Creating

Finding People & Finding

Expertise Information

Becoming
Aware

Commercial-in-confidence
14
People - We Will Assess The Behavioral Norms At Twin Creeks
Do they support transparency, the individual, groups and collaboration?

High
Collaboration
• How is the organization currently structured?

Level of purpose or Goal

Cooperation
• How are the business processes helped or hindered by
the current structure? Coordination

• Is there multi-functional collaboration occurring between Communication

the various functional areas?
Conversation
• How much do you know about the ongoing projects in Low
Low
other departments? Level of Commitment High

• To what extent do silos exist within the organization?

• Is there a social platform that enables easier
collaboration?

Commercial-in-confidence
15
Assess Employees Digital Intensity

1. Business
Acumen 4. Agile Structure

2. Technological
Savvy 5. Entrepreneurial
Spirit

3. UX Design 6. Collaborative
Process

Source: Deloitte University Press Commercial-in-confidence

16
The Four Levels Of Digital Intensity Are Related Work Differences

Remote Monitoring Remote Control Autonomy w/ Human Fully Integrated

Intervention Automation

Core work change:
• Motor – visual skills to
technical analyses
• Loss of situational stimulus
• No touch-feel confirmation
on hunches
Core work change:
• Passive observation to action
• Deeper decision as no tacit
situational feedback
• Increased individualized
accountability
Core work change:
• From action to analyses
• Interventionist role
• Systemic continuous
improvement
Core work change:
• Fully systemic interpretive
• Algorithmic driven
continuous improvement
• Over the horizon
anticipation

Commercial-in-confidence
17
VCI’s Digital Intensity Index Employees

Fully Engaged

Well Engaged

Engaged
GAP

Disengaged

Actively
Disengaged

Business Technology Agile Entrepreneurial Collaborative

UX Design
Acumen Savvy Structure Spirit Process

Commercial-in-confidence
18
Business Processes Are Key To Optimization They Are Aligned, Digitized And Dynamic

Standardized
Dundee Precious Metals Chelopech
GEMS GEMS Mine Production Activities Work Management
Draft Version v1.1
02/05/2015

• BPM is an internationally established standard for business process

INFORM BACKFILL
CHECK PLAN IF PLANNED ENGINEER AND SENIOR
ASSIGN START&END DATE Targets will be YES Mine production plan
TONNES AND GRADE WILL RESOURCE DEVELOPMENT
TO ACTIVITIES met? announced to be prepared
BE MET GEOLOGIST FOR

modeling
Month Plan PREPARED PLAN
NO (1+2 Month GEMS
005 006 008
Mine Planning and Mine Planning and Outlook) Mine Planning and
Design Engineer Design Engineer Design Engineer

• Standardized procedures, regardless of tools and service providers is ADD/ REARRANGE

PRODUCTION ACTIVITIES
TO MEET TARGET

a must Mine Planning and

Design Engineer
007

• Import and export of BPM files are possible WM.PR.M.01.02

WO List (Plan) Draft Mine
Production Month
Plan

Process control
Resource development
drilling activities planning Planned exploration drilling Draft Mine WO List (Plan)
activities GEMS Production Month
Plan

• Who is doing what? Who did what?

WM.PR.M.01.01

STORE DRAFT MINE COORDINATE DEPENDENT

Backfill activities planning Planned mine production ACTIVITIES AMONG Coordinated dependent
Planned backfill activities PRODUCTION PLAN ON
activities MAINTENANCE, SERVICES activities

• Comprehensive documentation in place

THE SERVER- TS
AND PRODUCTION
WM.SA.02
009 MR.1 010
Mine Planning and Director of Production

• Business logic is included in the BPMN model

Service activities planning Submitted draft service Design Engineer
activities plan Coordinate
dependent
activities in the

• Process versioning is managed

plan

• Automation of even small steps

Updated mine production
Budgeting and Reporting
plan and targets

• Integration of third-party systems possible

28-days Plan- Mine
Draft Mine Production
Production Month
Plan

Communication and visualization WO List (Plan)

GEMS
Forecast and
Budget (Excel)
InSite

• Communication between business units and functions enabled INTRODUCE CHANGES

AND/OR APPROVE THE
INTEGRATED PLAN
MODIFY MINE PRODUCTION
PLAN
UPDATE CHANGES IN
PLAN, TARGETS AND MINE
PRODUCTION FORECAST
Updated forecast and plan
in InSite

• Improved documentation and control of business processes

IN InSite

011 012 013

Mine Planning and Senior Planning and
Director of Production Design Engineer Ventilation Engineer

• Control and visualization of new business areas

Operation standards
Approved changes in the
maintenance and services 28 days locations and
plan activities in GEMS

• Drag & drop for all elements possible WM.SA.02

WM.PR.M.02

• Automatic links in place

Service activities planning
Mine production scheduling

• Consistency checks
• Insertion of follow-up elements via mouse click
• Easy alignment of elements

Commercial-in-confidence
19
Our Technology Review Is Focused On User Screen Experience

On-Screen
Work
Execution

Role Success

Reframe Work
Manual Digital?
Business Processes
KPIs/ Performance Management
Role Description
Function's Mission

Commercial-in-confidence
20
Reframe Work – The What And How …
Enquiry

Event Alarm

Actuator Data

Knowledge
User Experience
Development
Approve
Process Realization

Complete

Decision Trees
Task
Knowledge
Drill down
Platforms
Architecture
Communications

Sensors/Actuators

Commercial-in-confidence
21
Process – We Identify The Maturity of Business Process Maps
Business Processes Maps Are The Link Between Digital and Work

Process Maturity (Ability and knowledge of processes)

BPM Capability
Gap
0 1 2 3 4
Initial Repeatable Defined Managed Optimized

BPM Maturity (The capability of the enterprise to automate processes)

22 Commercial-in-confidence
22
VCI’s Digital Intensity Assessment Business Process

Optimized
Target

Managed

GAP
Defined
Actual

Repeatable

Initial

Process Operation
Standardized Communication Visualization Use Intensity
Control Standards

Commercial-in-confidence
23
Digital Intensity Assesses The Use Of Technology Throughout The Organization

Human Experience & External

Interfaces

IoT Platforms and Processes

Communications & Controllers

Linking the Things & People

Commercial-in-confidence
24
Technology includes IoT and IT/OT convergence
Enterprise
LEVEL5 Enterprise Network Zone
Router IT
LEVEL 4 Email, Internet, etc. Business Planning & Logistics Network

Terminal Patch AV
Services Management Server Firewall

X DMZ
Historian Web Services Application Firewall
Mirror Operations Server
Factory Talk Site Manufacturing &
LEVEL 3 Factory Talk Engineering Domain
Application Operations Control
Directory Application Controller
Server

Factory Talk Operator Engineering Planning Area Supervisory

LEVEL 2
Client Interface Workstation Workstation Control
OT

Batch Discrete Drive Continuous Safety Basic Control

LEVEL 1
Control Control Control Process Control

LEVEL 0 Sensors Drives Actuators Robots Process

Commercial-in-confidence
25
Optimization Includes Predictive And Prescriptive Modeling
Scheduled 1 Smart data discovery
Descriptive Reports
Analytic 1
Analytics Application 2 Predictive modeling
What happened?
2 3 Pattern matching
Why did it happen? Predictive 8
Query & Ad Hoc Analytics 4 Complex event processing CEP
Reporting
Analytics in
Application 5 Multi variate statistics

What will happen?

6 Forecasting
Data 3
Discovery
7 Regression analyses
How can we make it happen? 4
5 8 Neural networks
6 9
7
9 Graph analytics
Prescriptive
Analytics
10 10 Operations research optimization

CORE PROCESS Schedule Mine Maintain Supply

Commercial-in-confidence
26
VCI’s Digital Intensity Assessment Technology

Autonomous

Autonomous
with intervention

GAP
Remote Control

Remote Monitor

Manual

Gathering & Gas processing Mixed NGL Fractionation NGL products &
Wellhead
compressing & treating pipelines facility pipelines

Commercial-in-confidence
27
Digital Intensity Assessment Architecture (Mining)

BUSINESS MANAGEMENT Enterprise Resource Management

SYSTEMS (ERP)

Operations Information Management

BUSINESS INTELLIGENCE Operations Collaboration Center Dynamic Operations Simulation
Visualization

Technical Systems Mine / Mill / Plant

OPERATIONS CONTROL & Maintenance Material / Supply
Geology, Engineering, LOM, Management Operations
ASSET MANAGEMENT Management Management
Planning .. System

Post Blast
Ventilation

Condition
Telemetry
Conveyers
Equipment

Reading
Tracking

Security
Water +

Crusher
Blasting
Remote
Access
Control

Control
Pumps

Tracking
People
Power

Fuel &
Doors

Lights
SUB-SYSTEMS
Hoist

Lube
Blast
CONTROL

Autonomous
TELECOMMUNICATIONS Wired Devices Wireless Mobile Personal Gateways and
Communications
INFRASTRUCTURE PLCs, SCADA Infrastructure Devices Platforms
Network

KEY PERFORMANCE Real Time, Continuous End to End Value Big Data Value Chain
INDICATORS Visible Data Automated Operations Stream Integration Analytics Collaboration

Commercial-in-confidence
28
Digital Intensity Assessment Heat Map

BUSINESS MANAGEMENT Enterprise Resource Management

SYSTEMS (ERP)

BUSINESS INTELLIGENCE Operations Information Management Collaboration Center Operations Dynamic Simulation

Technical Systems Mine / Mill / Plant

OPERATIONS CONTROL & Maintenance Material / Supply
Geology, Engineering, LOM, Management Operations
ASSET MANAGEMENT Management Management
Planning .. System

Post Blast
Ventilation

Condition
Telemetry
Conveyers
Equipment

Reading
Tracking

Security
Water +

Crusher
Blasting
Remote
Access
Control

Control
Pumps

Tracking
People
Power

Fuel &
Doors

Lights
SUB-SYSTEMS
Hoist

Lube
Blast
CONTROL

Autonomous
TELECOMMUNICATIONS Wired Devices Wireless Mobile Personal Gateways and
Communications
INFRASTRUCTURE PLCs, SCADA Infrastructure Devices Platforms
Network

KEY PERFORMANCE Real Time, Continuous End to End Value Big Data Value Chain
INDICATORS Visible Data Automated Operations Stream Integration Analytics Collaboration

Commercial-in-confidence
29
We Calculate The Value Of Each Possible Opportunity

Levers Drivers Examples

• Speed strategic decision making
Faster decisions • Provide more frequent, accurate analysis

Create strategic • Estimate impact using cross-organizational analysis

Better decisions • Quantify impact of decisions
value
• Use predictive analytics to forecast maintenance
Proactive decisions and scheduling
• Gain operational insights
Digital sources
• Retool skills of current employees to emphasize
of value problem solving and recommendations
Improve capabilities
• Free employees from low-value activities
• Reduce effort needed to extract, consolidate, and
Increase automation produce reports
Improve • Free management from low-value analysis
efficiency • Eliminate redundant tools for data extraction,
Eliminate redundant tools reporting and analysis
• Standardize metrics, approved and rationalized by
Streamlining processes global stakeholders
• Create transparent analytics demand
management process
Commercial-in-confidence
30
Quantitative Assessment To Determine The Financial Impact
Value Proposition Value Driver

Improve Capital
Increase Expenditure Return
Revenue
Optimize Portfolio

Stage 3:
Process Efficiencies

Reduce Labor (FTE)

Reduce Stage 2:
Reduce Energy Costs
Costs
Reduce Fuel Costs
Stage 1:
Reduce G&A

Stage 0: (Off the shelf current opportunities)

Improve Safety Phase 1: Phase 2: Phase 3:
Reduce
Improved Training
Risk
Short Stage Gates

Commercial-in-confidence
31
Benefits Of Implementing The Right Digital Solutions Span Across Cost Reduction,
Increased Asset Efficiencies, Reduction In Risks, And Value Gain Through Integration

1 2 3 4

Reduction in Costs Increased Asset Reduction in Risks Value of Integrated

Efficiency Information

• Optimization of technology
spend
• Elimination of duplication
• Project scaling, knowledge
sharing, and cross skilling
• Reduced compliance costs
• Consistent approach to
vendor & supply
management
• Efficiency gains in asset
maintenance, workforce
management, and
operational processes
• Improved forecasting
• Reduced unplanned
maintenance & repair
• Better enterprise-wide
alignment
• Enhanced compliance and
safety standards
• Increased regulatory and
environmental compliance
• Shared standards and
platforms reduce risk of
future integration project
failures
• Improved reports and
dashboards
• One-truth
• Faster decision making
• Platform for advanced
business improvement
initiatives

Commercial-in-confidence
32
VCI’s Digital Intensity Assessment Approach Consists Of 6 Steps Summarized Below
Phase 1 Data Phase 2 Data Digital
Project Vision and Gap Digital
Collection Collection Transformation
Mobilization Analysis Roadmap
(Big Picture) (Deep Dive) Hub

•Conduct Map systems - Drill down - Engage team – Business model – Program
background •Map value streams •Edge devices • Appreciate results • Economics of Management Office –
reviews, project & flow sheets •Networks • Identify vision concepts • Develop schedules
planning, and •Organization •Systems; systems • Define the art of the • Contact vendors • Establish budget
kickoff meeting to structure & integration possible • Project plans: and admin
determine schedule Management •People interfaces PoCs; Demo • Allocate resources
and KPIs Systems •Communication Sites or • Governance model
Installations

• Project plan • Mapped value • Digital assessment • Management • Business case • Action plans to
mapped streams defined adopts assessment developed address strategic
• Resources • Mapped flow • Edge devices • Developed Vision • Roadmap change priorities
allocated sheets defined • Identify strategic designed • Deploy AGILE
• Senior team • Mapped IT/OT • Mobile and people priorities • Risk profiles management
workshop signoff architecture interfaces defined • Vendors aligned method
• Buckets identified • Usefulness • Monitor
assessed performance with
Balanced Scorecard
Commercial-in-confidence
33
We Put Together the Team With the Skills Necessary for Your Success

… plus another 100+ across the globe

Commercial-in-confidence
34
VCI Represents Bespoke Design Matched With World Class IP And Methods

Bespoke Co-Design Capability

IP and Methodologies

Strategy Design Org Design Transformation Innovation

World Leading Team

Commercial-in-confidence
35
Why VCI’s Approach Works

• Program sponsored senior leadership, with dedicated project leader

Drives top- down leadership
• All executive members sponsor cross-functional initiatives
commitment • Single journey fact base forces all functions/leaders to come to table

• End-to-end journey teams inherently cross-functional

Forces cross-functional
• Journey-based approach forces a rethinking of organization boundaries
design at working level • Outcomes and metrics cut across silos, often in new ways

• Prioritizes initiatives for rapid impact and scale

Forces focus and
• Strained process/policy/IT roadmaps have to be streamlined
prioritization • Sacred cows within siloes cannot be hidden/defended

• Frontline teams empowered to design and test solutions

Engages the frontline • Creases culture of innovation and ownership

Commercial-in-confidence
36
VCI’s Digital Intensity Assessment Leads To Action

Mobilization Data Data Digital Intensity Digital Digital

Collection Collection Assessment Roadmap Transformation
Big Picture Deep Dive Hub

Commercial-in-confidence
37